Hurt by housing turmoil, Lowe's profit down 18%

CHARLOTTE, N.C. - If you are looking for a sign the economy is still in need of repair, you can find it at Lowe's Cos. Inc.

A struggling economy and continued turmoil in the housing market drove the nation's second-biggest home-improvement retailer yesterday to report a nearly 18 percent drop in first-quarter earnings from a year earlier and lower its guidance for the year.

Its shares fell 2.57 percent, or 64 cents, to close at $24.25.

Investors may see similar results from larger rival the Home Depot Inc., which is expected to post lower first-quarter profit today, pressured by declining sales and costs tied to store closures and a scale-back of future openings.

"It's been a challenging sales environment," said Lowe's chairman and chief executive officer Robert A. Niblock in an interview with the Associated Press. "As we continue on in a tough environment, with rising other costs for the consumer, be it food or fuel or whatever, what happens on the employment front has yet to be seen and can certainly be more tough on more consumers."

Lowe's, which is based in Mooresville, N.C., said net profit in the period ended May 2 fell 17.9 percent to $607 million, or 41 cents a share, from a year earlier. Sales slipped to $12.0 billion from $12.2 billion a year earlier.

Analysts surveyed by Thomson Financial had been looking for net income of 40 cents a share on revenue of $12.4 billion. Estimates usually exclude onetime items.

"These results should not prove terribly surprising," wrote the Goldman Sachs Group Inc. analyst Matthew J. Fassler in a client note.

The home-improvement sector has been hurt as consumers pulled back on renovation spending in the face of falling home values, tighter credit requirements, and higher prices for basic items such as food and gasoline.